The Complete Guide: How to Apply for a Credit Card in Canada

by Robyn Howard ·
Published November 26, 2018
· Updated December 2, 2018

New to a Canadian credit card application? Don’t worry, this is the reason why we put this post together to help you navigate through the process more easily.

If you’ve applied for a credit card before, then you probably know that it could be quite daunting; the issuing financial institutions usually digs into your financials for any red flags. But if this is your first time applying for a credit card, don’t worry, there’s always a first time for everything. Thankfully, this guide is all about making your application less hectic, at least as far as the Canadian credit card application process is concerned.

A good number of banks in Canada shy away from issuing credit cards to individuals with little to no credit history. This could be very frustrating especially when you just moved to a new country.

Canada is one of those countries that take the credit records of individual very seriously; even with decades of credit history in your country with the global player VISA, it may sometimes not be possible to obtain credit right away in Canada.

When looking to sign up with a credit company, try to explain to them your past credit back in your home country. If possible, bring with your credible statistics such as statements to be able to argue a good case for your creditworthiness.

But today we won’t talk much about credit card companies; rather, we’ll look at how to apply for a credit card in Canada and what exactly you need to have to get approved.

How to Apply for a Credit Card

Essentially, there are three ways of applying for credit cards in Canada:

In person: You can decide to walk into any credit card company and have a member of their team take you through the process.

Online: Online applications are always convenient, but there is always a likelihood of your path being crossed by the likes of online scammers. This option should probably be used if you truly cannot make a physical visit.

Over the phone: This is another channel of applying for a credit. But it may only apply to Canadian citizens.

Choosing the Right Credit Card for New Immigrants in Canada

It is important that you identify a credit card that matches your needs; different companies have different credit card options. Don’t worry, choosing the right credit card will be fairly simple by the time we get to the end of this guide.

For most companies, applying for a credit is quite simple; the only hindrance or delay can be due to not having the right documentation in place.

Speaking of documentation, let’s look at what you’re required to have when applying for a credit card.

Requirements for Credit Card Application

To be able to be issued with a credit card, you’ll need to provide the following to the issuing company:

Name and date of birth

Your residential address, email, and phone number

Proof of your annual income

The current and previous employer or business details in case you’re self-employment

Social Insurance Number

In most cases, a credit history within Canada

Having highlighted the basic requirements for being issued with a credit card, let us discuss the core ones briefly to help you wrap your head around them.

You will not be issued with a credit card in Canada unless:

You are of the right age with an income or consent. You’ve attained the minimum age of 21 or 18 with a verifiable income or your parents’ permission. Banks and other financial institutions are protected from illegal activities by the CARD Act of 2009; the Act prescribes that banks should not market their products to young adults who are still incapable of repaying loans. This is why individuals who are between 18 and 21 years old are required to provide proof of an existing business under their name to providing consent from their parents.

Have a social security number. Individuals without social security numbers cannot establish credit histories. This, therefore, means that all migrants without social security numbers will not be issued with credit cards.

Have an income source. This should be obvious, right? Because if you don’t have an income, there won’t be any credit history to talk about anyway. No one can lend you money if you don’t have a way of repaying it.

So, if you asked me, this is how to establish a credit history. Credit histories are built on income generating individuals who need funding at some point to be able to repay it using their already existing income. You can also decide to report on that section of your income you are sure will always be available. However, don’t be mistaken; banks can easily come for that income you never reported when applying for a credit card when you default in your repayments.

Have a positive credit history. Remember those times in college when comrades flashed their cards at every liquor joint without much thought about the repayments? Well, if you were one of them, then you’ve got to start paying up before the default notices start coming in fast and hard.

Building a good credit history is not all about the amount you owed and how you’re repaying it; rather, you may not be in a position to repay as much as the banks would wish, and then you need to communicate with them on a timely basis and request for softer repayments. This way, you still remain in good books with lenders and it gets much easier to get another line of credit.

How Long Does it Take to Build a Credit History in Canada?

Credit cards for new immigrants to Canada can only be issued after the bank receives up to 18 months of clean history. This, therefore, means that if for some reason you’re denied a line of credit due to a poor credit score or no credit history at all, you’ll have to build a reputation over a period of 18 months or less depending on the bank.

How to Improve the Chances of Being Offered a Credit Card

Companies try as much as possible to minimize the risk of issuing credit to someone who is not capable of making the repayments and in a timely manner.

To help get on the good side of credit issuers, here are a few tips that work everywhere around the world:

Understand Where your Credit Score Lies at All Times

It is easier for you to improve on anything if you know your current score; understanding the status of your score is very important. This will enable you to know how much hard work you need to put in in order to actually improve.

A credit score lies between 300 and 900; lenders rely on these figures to evaluate how fit you are credit-wise.

Canada is served by two credit reporting agencies, namely TransUnion and Equifax. You can obtain a credit report from them or get training on managing your credit score.

Report Correct Incomes

Most credit card companies have a minimum operating income requirement for their cards; currently, many issuers require one to have an income of $15,000 to $80,000 pa.

Don’t be tempted to lie to the lenders about what you earn by either underestimation or overestimation. Whenever they discover that you’ve not been truthful, it will be impossible for you to obtain any form of funding.

Remember that any income that is reported must have a corresponding tax return; otherwise, you may get into even bigger problems with the tax authorities.

Repay Any Other Debts You Owe

Having too much debt under your name can be a big turn off for lenders. The last thing they want is to issue a line of credit to someone incapable of repaying. Try as much as possible to clear your debts to enable you to free up your revenue levels. If you’re going to come off like someone who’s overburdened with debt, credit companies are unlikely to burden themselves with you.

Consider Going for Secured Cards

Such cards allow you to provide some form of security to the company issuing you with a credit card. This will give the banks, for example, a lot of ease knowing that in case you default on a payment, or lose your job, you will still have something that can be taken in place of the loan. Also, ensure that the provided security doesn’t keep you relaxed on your repayments simply because you don’t fear to lose the security. Some people have been known to provide the security they can’t afford to lose just to stay committed to the repayments.

Retail Cards are a Better Choice

Consider going for credit from non-financial companies such as gasoline or other stores. This will ensure you can buy things from selected stores but you won’t be able to borrow more money. It is a disciplined way of getting a hold of your money. However, the only downside with these cards is that they attract higher interest rates compared to banking institutions.

Get into a Joint Card Application

If you have a friend or a relative who might be interested in a joint credit card application, then you can consider taking this option. Ensure that you choose a good credit score to be able to boost your chances of getting an approval.

Is it Possible to Transfer Credit History from your Home Country to Canada?

This question has been answered in so many ways by different people, but the answer never seems to come out clearly. However, I managed to establish that Canada does not adopt credit histories from other countries regarding its citizens. The closest a Canadian/immigrant can come to adopting another country’s history is if you come from the neighboring United States.

The US is the only state with some sort of arrangement whereby citizens of both countries can exchange credit histories.

However, this is not a documented agreement and it will be upon the bank to decide whether or not they will rely on your credit history during your stay in Canada.

Generally, credit bureaus differ from state to state; this is why most countries cannot simply rely on their peers’ reports in different states.

Conclusion

You now know how to apply for a credit card in Canada; congratulations!. You can now proceed to apply for it at your preferred financial institution.

In conclusion, whenever you settle your financial obligations on time, your credit history gets built. This is what Canada’s central credit bureaus’ use to evaluate your credit score over time (otherwise known as a credit rating).

And if the history shows consistent timely repayment of your debts, there’s no way you can ever be denied a line of credit.

You can either make your payments using your debit card, credit card, or bank transfers to be able to establish a good transaction history.

Below are a few benefits of credit cards:

Credit cards are perfect for shopping and making payments.

It is a convenient and safe way of a carrying around money.

A lot of purchases require one to pay with credit cards; you would be in a hard place if you were to miss one.

They are a cost-effective way of making payments; many Canadians use credit cards for their payments because they are not subjected to exchange rate costs.

Did you know you can use these cards as a form of ID? Well, I thought you should know!

The benefits of credit cards don’t stop at the listed ones as we’ve not spoken about rewards accumulation, which can be redeemed at various shopping outlets. Oh, and they are insured, so if you happen to lose or break something you just purchased, you can be sure it’s all taken care of.